Following the financial crisis of 2008, New York City knew that its frameworks for the management of its pension system had to change. That meant taking action by hiring the city’s first chief investment adviser to then mayor Michael Bloomberg.
Accepting this challenge was CFA® charterholder, Ranji Nagaswami. Nagaswami brought to the role over 20 years of financial management experience and degrees from both Bombay University and Yale School of Management.
Immediately, Nagaswami analyzed the challenge ahead: Pension liabilities, already at 8 percent of the city’s budget, would soon rise to 12 percent even in the strongest markets.
Nagaswami’s deep, holistic understanding of markets and asset allocation expertise earned her immediate credibility as the right person for the job. But the real challenge was leveraging that credibility to earn trust from the many stakeholders within the public-sector organization — and, ultimately, building true consensus amid crisis.
Nagaswami advised each of the city’s five pension boards and acted as chair of the NYC Employees’ Retirement System, one of the largest in the country.
She found that administration officials, trustees, investment staff, union leaders, and consultants all had the same commitment to the best interests of pension participants and beneficiaries, but that they didn’t always agree on exactly how to direct management of the funds.
Needed most was a re-evaluation of investment frameworks, particularly risk policies. Nagaswami’s team spent the next two years helping constituents understand risk at a more fundamental level, as well as charting a new roadmap towards a balanced and long-term-focused portfolio.
By the end of the second year, the administration and unions alike better understood the unique structural difficulties in managing the city’s assets and liabilities.
Agendas began to coalesce. The Mayor’s Office and Nagaswami successfully drove significant restructuring of investment policy by persuading various stakeholders to put aside political agendas, align on a governance approach, rein in management costs, and focus on long-term management of the funds.
Although Nagaswami’s duties for the mayor’s office were completed in 2012, her mission to make a larger impact was not. Moreover, her professional experience as an asset owner left an indelible mark: She realized that there was a huge need to help the owners of capital invest with a holistic view integrating their operational, financial, and investment risks.
This led her in 2016 to Hirtle Callaghan, an investment firm that pioneered the model of an outsourced chief investment officer and serves as the investment department to institutions and families. The firm works in partnership with clients to design investment solutions that help not-for-profit organizations accomplish their critical missions, or families maximize the impact of their philanthropic contributions.
More than 1,400 firms dedicate themselves publicly to putting client interests first through the CFA Institute Asset Manager Code.
In a 2017 survey, 94% of CFA Institute members said the potential impact of investment management on society could become more positive if it incorporated higher principles.
About three-quarters of investors say it is important that the firm they work with employ investment professionals with respected credentials, such as the CFA charter.
Nagaswami sees her current position as the best possible alignment of her purpose-driven goals. “The future of the investment industry must include business models that are both profitable and sustainable for the long term. It will be client-centric, conflict-free, innovative in investment and solutions-led thinking,” said Nagaswami. “I’m proud to lead the team that’s advancing just that.”
Ranji Nagaswami, CFA
In her spare time, Nagaswami also works with The Aspen Institute and CFA Institute on new initiatives to create a positive future for the investment management industry. This led to the creation of The Aspen Institute’s Finance Leaders Fellowship.
The Aspen Finance Leaders Fellowship was created in the aftermath of the financial crisis, and fellows meet four times a year over the course of two years. The asset managers, savers, users, and stewards of capital who are selected to participate in the program are chosen for their leadership and entrepreneurship.
This fellowship’s purpose is “. . . [to bring people] together to talk about finance and how it can have a positive impact on society.” Nagaswami has faith that Aspen Fellows will help change the course of society for the better.
The future of the investment profession may not be certain, but there’s no question that leaders who are inspired to make a difference will continue to shape the industry for the better. Leaders like Nagaswami.
“My life’s work is not about my personal leadership or business success,” said Nagaswami. “It’s about contributing to a future for our industry that advances its central role in building a better society.”